Zee shares decline almost 5% as Sony Pictures unlikely to extend the timeline for the merger
The development puts the country’s largest-ever entertainment deal on the brink of collapse after enduring months of discussions, particularly concerning the appointment of a CEO for the combined entity. The uncertainty surrounding the merger’s fate has added to the ongoing challenges and debates within the companies involved.
The stock lost as much as 4.7 percent to its day’s low of ₹267.25. It is still over 55 percent higher from its 52-week low of ₹172.25, hit on June 6, 2023. The stock has gained 12 percent in the last 1 year and 25 percent in 2023 YTD.
On Sunday (December 17), Zee formally requested an extension to finalize its proposed merger with Sony India, aiming to create India’s largest media conglomerate. The current cutoff date for concluding the merger is set for December 21.
Zee, in an exchange filing, asked Bangla Entertainment Private Limited (BEPL) and Sony Pictures Networks India Private an extension to make the merger scheme effective, as outlined in the merger cooperation agreement.
The merger’s cutoff date, scheduled for December 21, 2023, marks two years from the signing of the merger agreement between the two media companies on December 21, 2021. Although the merger secured the necessary approvals, disagreements arose, primarily revolving around the appointment of the chief executive officer (CEO) for the combined entity.
The founders of Zee, the Subhash Chandra family, have been advocating for the appointment of Punit Goenka as the managing director (MD) and CEO of the merged entity. However, Sony has expressed reservations about Goenka’s appointment due to an ongoing investigation by the Securities and Exchange Board of India, as reported by Bloomberg.
The timing of Zee’s request for an extension is noteworthy, coinciding with the inability of two independent directors, Sasha Mirchandani and Vivek Mehra, to secure re-appointment to the company’s board. The company disclosed in an exchange filing that the two directors “failed to get the requisite majority of votes.” This development adds another layer of complexity to the ongoing dynamics surrounding Zee Entertainment and the proposed merger with Sony India.
If the deal goes through, Sony shareholders would hold 50.86 percent of the combined entity, while Zee’s promoters will hold 3.99 percent. Zee‘s shareholders will be holding the remaining 45.15 percent stake.
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Published: 19 Dec 2023, 10:52 AM IST
